Sales of New Homes in U.S. Surge in August
U.S. new-home sales rose in August to the second-highest level ever, according to government figures released Thursday, and other reports on jobs and inventories also suggest economic growth is likely to accelerate in the final three months of the year.
New single-family home sales grew 2.9% in August, following gains of 0.8% in July and 3.6% in June, the Commerce Department said. Last month’s sales of 983,000--exceeded only once, in November 1998--should fuel demand for appliances and home furnishings, analysts said.
A report that second-quarter gross domestic product rose at a revised 1.6% annual rate, the slowest in four years, also showed the most sluggish inventory buildup in almost seven years. That sets the stage for economic growth to accelerate in the second half of the year as companies restock to meet demand.
“Inventories are very, very lean right now,” said Mark Vitner, an economist at First Union Corp. in Charlotte, N.C.
Growth in the third quarter ended Thursday is estimated to have risen to a 4% annual rate, according to economists surveyed by Bloomberg News. They expect little change in the final three months of the year, saying fourth-quarter GDP is likely to rise 3.7%.
The current economic expansion will become the longest ever in January, and its backbone--the best job market in almost three decades--shows no signs of weakening.
The Labor Department said Thursday that the number of first-time jobless claims filed last week remained below 300,000 for the 10th consecutive week, even after a Hurricane Floyd-related increase of 25,000 last week to 299,000.
That suggests job growth remained strong in September.
There was little evidence of accelerating inflation in Thursday’s reports. The GDP inflation gauge known as the price deflator rose at a 1.3% rate in the second quarter, slower than the 1.5% first reported. The median price of new homes fell 3.9% to $150,800, the lowest since July 1998.
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New-Home Sales
Seasonally adjusted annual rate, in thousands of units:
August: 983,000 units
Source: Commerce Department
